‘£40m public money set to be wasted in Wales’ due to bedroom tax impact on disabled people

06/02/2014

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​MORE than £40m of public money is set to be wasted in Wales due to the removal of the spare room subsidy from disabled people living in specially adapted properties, according to a report by one of the country’s biggest housing associations.

Wales & West Housing has produced a report “Who Pays? -The Impact of the Removal of the Spare Room Subsidy on Disabled Residents living in Adapted Properties in Wales.” (see report below)

The housing association, which manages more than 9,500 affordable homes across 12 local authority areas in Wales, is now campaigning for the spare room subsidy to be reinstated for disabled people living in properties which have been substantially adapted for their needs.

The report's key findings are as follows:

Of the 779 Wales & West Housing households assessed as under occupying their homes, 74 - approximately 10% of the above figure - live in homes that have been specifically, and in many cases, substantially, adapted for their needs at an average cost of £7,700 each.

As a result of the removal of the spare room subsidy almost half of these disabled households are now in arrears with their rent.

If all the disabled residents living in significantly adapted properties are forced to move home it is estimated £575k of public money will have been wasted in adapting their properties in the first instance.

Even if other, smaller, properties were available, it is estimated a further £600,000 would need to be spent adapting these to meet our residents’ needs.

It is estimated, therefore, that the total cost to the public purse of WWH’s 74 disabled households having to move would be well over £1m.

Figures from 21 of the 22 local authorities across Wales show that approximately 35,000 households in Wales have been affected by the removal of the spare room subsidy. If 10% of these are disabled households – as is the case with WWH residents - it is estimated that around 3,500 disabled households with specific adaptations will have been similarly affected.

It is therefore estimated that the total cost to the public purse in Wales of the removal of the spare room subsidy for disabled people in substantially adapted properties would be £40m (£25m having been spent on adaptations to existing properties, and £15m which would need to be spent on alterations needed to adapt new smaller homes, even if such properties became available).

Shayne Hembrow, Deputy Chief Executive and Commercial Director, Wales & West Housing, said: “Our research shows that the removal of the spare room subsidy from disabled people living in adapted properties in Wales makes no financial sense whatsoever. The cost of new adaptations wipes out the potential savings in housing benefit for many years.

“Wales is on track to waste at least £40m of public money as a result of the removal of this subsidy. At a time of intense financial pressure on government and local authorities we believe disabled people living in substantially adapted homes should be exempt from the regulations.

“Our research has also shown that over half of our disabled residents living in substantially adapted properties have fallen into rent arrears due to the removal of the spare room subsidy.

“Yet it is a pernicious, Catch-22 situation for most, if not all, of them because there are simply nowhere near the required number of smaller properties available for people with disabilities to downsize into.”

Wales & West Housing sent its report to Iain Duncan Smith, Secretary of State for Work and Pensions, and is now sharing its findings, and the response from Lord Freud, Minister for Welfare Reform, with politicians, charities, faith groups and other stakeholders throughout Wales.

“We were profoundly frustrated by the response from Lord Freud, on behalf of the Secretary of State,” said Mr Hembrow.

“We understand the need for reform and the need to get to grips with public finances. We understand the need for change but not putting dogma before common sense, forcing disabled residents to downsize or continuously apply for discretionary housing benefit is an enormous waste of money and time. It makes much more sense to exempt these people from the removal of the spare room subsidy and thereby save the public purse millions.”

“I therefore call on all other social housing providers in Wales, and everyone who has an interest in this matter, to consider the findings of our report, and to themselves lobby for this deeply unfair policy decision to be revoked.”

“Who pays?” The impact of the removal of

the spare room subsidy on disabled

residents living in adapted properties in

Wales

The removal of the spare room subsidy is having a negative impact of considerable significance on disabled people living in adapted properties.

At Wales & West Housing, our research has shown that there are few, if any, suitably adapted homes for disabled people to ‘downsize’ into and, as a result, many are now in arrears with their rent and at risk of losing their home.

The solution offered by the UK Government of Discretionary Housing Payments (DHPs) is not working for our residents and is unlikely to ever provide a secure and sustainable option.

If all our disabled residents who require significantly adapted properties are forced to move home we calculate an estimated £575k of public money will have been wasted and even more will need to be spent adapting their next homes.

Based on our findings and giving due consideration to effective use of the public purse we therefore urge the Government in the strongest possible terms to exempt disabled residents living in significantly adapted housing from the removal of the spare room subsidy.

The Welfare Reforms

The removal of the spare room subsidy, introduced in April 2013 as part of the Welfare Reform Act has changed the rules for social housing tenants. Those deemed to be under-occupying by one bedroom have had their housing benefit payment reduced by 14% and for those under occupying by two bedrooms the reduction is 25%.

Some exemptions have been made; disabled tenants or their partners who need a non-resident overnight carer, foster children, adults who are in the armed forces and continue to live with their parents and some children who cannot share a bedroom because of a disability or medical condition. However, no exemptions have been made for people with disabilities who are living in properties that have been adapted for their needs. The UK government increased the resources for Discretionary Housing Payments (DHP) administered by local authorities and has consistently suggested that people living in adapted properties can apply for these funds.

The system for DHP is for each local authority to determine and several have produced guidance and/or criteria to help people understand the circumstances where awards are likely to be made. DHP awards are generally made for 6-12 months after which households need to reapply. The process entails applicants being assessed on their ability to ‘afford’ the rent they are now being required to pay based on a simple income and expenditure budget exercise. The financial assessments are taking disability benefits into account as income, despite these benefits having been allocated in order for people to cope with the extra expenses related to their conditions.

Wales & West Housing’s experience

We have 779 households assessed as under-occupying their homes. Of these, 74 households (approx. 10%) live in homes that have been specifically, and in some cases substantially, adapted for their needs. The two most common forms of adaptation are for walk-in showers and stairlifts. The total cost of adaptations to these 74 disabled households we estimated at £575k, at an average of cost of £7,700 per property, the majority of which has been publically funded. Largely as a result of the removal of the spare room subsidy, half of these disabled households are now in arrears with their rent.

For some disabled people adapting their existing home was not possible and an alternative, larger home, was sought where the works could be properly undertaken. This is often the case where ground floor bedroom and/or bathroom facilities are required.

There is a chronic shortage of one and two bedroom homes and certainly no existing adapted homes for our disabled residents to move into. We therefore estimate it would cost a further £0.6m of public money to adapt alternative accommodation if all disabled residents who are under-occupying had to move. Furthermore it is unlikely that the vacated adapted properties would all be completely suitable for new occupants and many of these would need additional works or even removal of some adaptations. We therefore estimate that the total cost to the public purse as a result of WWH’s 74 disabled households having to move would be well over £1m.

The most recent figures received last autumn from 21 of Wales’ 22 local councils show that more than 35,000 people in Wales have been affected by the UK Government’s bedroom tax. If the number of homes under-occupied by disabled people for all the social lettings in Wales is similar to WWH at around 10%, then we believe that approximately 3,500 disabled households are affected. The cost of adaptations to these homes will have been in excess of £25 million which will be wasted if these households have to move due to removal of the spare room subsidy. Alternative homes will need to be adapted for these 3,500 households which will all have to be funded by public money. The adapted homes they have vacated will need some alteration to make them suitable for new residents, even if they are disabled, and these costs, perhaps as much as £15 million will also have to be publicly funded.

We believe, based on our research and experience, that the impact will not be a better use of affordable housing stock in Wales and furthermore will not in any way result in a saving of public funds. Instead we believe that removal of the spare room subsidy for disabled people in adapted properties will cost the public purse many millions more, £40 million more.

To avoid disabled people having to move they will have to increase their income to pay the shortfall. The two primary ways of achieving this are to get employment or additional benefits such as DHP. In reality employment is not an option for some disabled people, especially those where significant adaptations have been undertaken, who are not able to find paid employment sufficient to enable them to afford to stay in their existing homes.

Increasing their income, for example through DHP, is also not an option for most of our disabled residents. Local authorities have limited funds to meet the strong demand for DHPs and are understandably cautious in the allocation of resources.

Our research has shown that our disabled residents living in adapted properties and who are under-occupying their homes are not eligible to receive a DHP under the criteria being used. To date only 11 have been awarded the payment and then only for 12 months, after which time it will be reviewed.

Disability related benefits, in particular Disability Living Allowance (DLA), are being regarded as income and as result disabled residents are being denied DHPs on the basis they have sufficient income to afford the reduction in their rent. For most other mandatory or discretionary payments, benefits such as DLA are disregarded as income in recognition that they will be used, as and when necessary, to pay for the extra costs of being disabled such as care, transport or equipment.

The fact that half of our disabled households affected by the removal of the spare room subsidy are not in arrears is because they have told us that they are using benefits such as DLA to pay the shortfall in their housing benefit and therefore are not spending the money for the purposes for which it is was intended.

Case Study 1

Judith Parker lives with her daughter Emma, 21, and son Luke, 17 in a four bedroomed bungalow which Wales & West Housing purpose-built for her in the Caerau area of Cardiff 12 years ago.

Luke suffers from muscular dystrophy and uses a wheelchair and Emma has learning difficulties. Single mum Judith also had another child – Paul – who also suffered from muscular dystrophy and who passed away three years ago at the age of 21.

Since April 1st 2013, due to the introduction of the ‘bedroom tax’, Judith has been judged to be ‘under-occupying’ her home as the bedroom which once belonged to Paul is now not occupied.

“It has hit us hard,” said Judith. “I would move to somewhere smaller if I could, but where can I go to? There are no suitable bungalows in this area, and I would not be happy to move out of the area because this is where we live. This is where our family and friends are. This is where people we know are.

“My kids get loads of support here, but before, when we lived somewhere else, we had horrible neighbours who used to insult my children and all sorts. It was awful. Why would I want to put them through risking that again?

“My neighbours here are brilliant. They keep an eye on me and the kids. If they don’t see me around for a couple of days they knock the door.”

As well as the help they get from friends and family, Judith, Luke and Emma are also supported by a team of carers who visit the family daily. But Judith, 44, worries about what would happen to Emma and Luke if she was to fall ill.

“What if I needed someone to stay overnight here? I am a single parent – what if I am ill and someone needs to stay to look after Luke and Emma? I need that extra bedroom.

“When Wales & West built this property for me, I was absolutely overwhelmed. It’s all on one level, we have a wetroom and the children had a bedroom each. Living here has made all the difference to me – without my home I know that I would not have been able to cope.”

Judith now says that she is having to watch what she spends ever more carefully thanks to the ‘bedroom tax’ which has seen her having to pay an extra £16.23 per week. “I’ve always had to watch our money,” says Judith, “but now I think about what we spend every day more than ever.

“I don’t think it is fair at all,” she said. “It’s absolutely ridiculous. They should stop it now.”

Case study 2

Jo moved into her two bedroom home in Wrexham in December 2007 with her son Daniel, then aged 17. He had one bedroom, Jo, then aged 38, had the other.

Due to severe health problems, Jo transferred from a first floor WWH flat because she was struggling with the steep stairs up to the first floor. She initially thought she could get by in her new home with a downstairs toilet but when she was assessed by the OT it was decided that she also required a wetroom and ultra bright fluorescent lighting. WWH completed the adaptations.

Since Daniel left home to cut his commute to work Jo, who has multiple health problems, has been deemed to be under-occupying her home. Since April 2013 she has been paying an additional £12.50 a week bedroom tax.

“It has had a big impact on me,” says Jo. “I now have to think really hard about putting on the heating. Last year being able to afford to keep warm enough was not an issue – now, thanks to the bedroom tax, it is. It’s horrible.

“Before my health began to give way I worked full time, I had my own home, and I even had my own business,” says Jo. “I had a life. Now every day is a constant struggle and being made to pay the bedroom tax has been a real blow. “But my deepest fear is being plucked out of my own home and being told I that I have to move somewhere else. I feel my health is dripping away and my home is all I have left.

“I am losing my sight – there is no hope of a cure for me – and I need to know my surroundings if I am to continue to live independently. I dread to think what is ahead of me. I fear that I will be forced to leave this house – my home – and start again somewhere else. That absolutely terrifies me.”

Jo worked full time as a carer for Wrexham Council – nightshifts - while bringing up her son, and after being made redundant 12 years later, set up her own business running an indoor skate park.

It was at this point, however, that her health started to seriously deteriorate. A cyst was discovered on one of Jo’s ovaries. It was removed successfully, but Jo then developed further problems which resulted in her stomach and part of her bowel being removed. A severe leg ulcer, and a degenerative eye condition proved to be further blows and Jo is also now contending with Stage 3 kidney failure.

“If you were sitting on the sofa with me now, you would look at me and wonder what the problem was,” she says candidly. “On the face of it I look fine. But I have to go to numerous appointments a month just to keep going. I live alone and have no support from a carer. I feel very vulnerable, especially at night-time, but I am trying to maintain my independence as long as possible and not have an overnight carer.”

She survives on the middle rate of DLA, lower rate mobility allowance, and ESA. (£101 per week and DLA £74 weekly).

WWH adapted Jo’s home shortly after she moved in. “If I didn’t have these facilities, I’d be absolutely stuck,” she says.”The downstairs toilet, wetroom and fluorescent lighting have been a godsend.

“Moving me somewhere else just does not make sense because there aren’t houses around in my area with these facilities, and even if there were, why should I move? This is my home. I know it, I know every room, I know my street and I know my neighbours, which is vital to someone who is going blind. How can I be expected to be uprooted and just start again?

“It’s not fair, but then it seems like if your life doesn’t tick the boxes then you are just disregarded. And to move me to a one bedroom house and then spend a fortune on adapting it for me also doesn’t make any sense.

“I understand why the Government has to look at the system. But it is the genuine people like me who are really suffering. Nothing is done on an individual basis and I don’t think it is fair.

“You do what you can do to empower yourself, but it still gets you nowhere. It makes you feel like just giving up.”

A more cost effective solution

If the disabled residents living in Wales & West Housing stock have to move to smaller homes, the £575k spent on adaptations will substantially have been wasted. Adapting new homes and removing or altering the existing homes to make them suitable for new residents will cost the public purse over £1 million. In addition, if disabled residents are forced to move to smaller and most likely unadapted home the public outcry will be considerable. There is an alternative and more cost effective solution.

If these residents were exempt from the removal of the spare room subsidy the waste of public money can be avoided. The application of the policy to existing households has caused the problem and exemption would prevent the financial and emotional stress currently being experienced. The policy can still apply for many new housing benefit applications as both residents and their advisors will be aware of the new rules.

We would, therefore, urge the UK Government to urgently consider:

Introducing an exemption for disabled people living in significantly adapted properties from the removal of spare room subsidy thus saving millions on the need for new adaptations.

Issuing clearer guidance to local authorities to disregard disability related benefits as income in DHP assessments.

Wales & West Housing is a charitable association with over 9,500 properties across Wales providing quality, affordable homes for more than 17,000 people. Established in 1965, WWH employs close to 500 staff, and works in 12 local authorities, making it one of the largest housing associations in Wales.

WWH's Letter to Iain Duncan Smith, Department of Work & Pensions

Rt Hon I Duncan SmithDepartment for Work & Pensions Caxton House Tothill Street London SW1H 9NA

Dear Sir

Re: The spare room subsidy and substantially adapted properties for disabled people

I am writing to you with regard to the removal of the spare room subsidy where residents are disabled and live in substantially adapted homes in order to highlight the waste of public money that will result.

Wales & West Housing manages more than 9,500 homes across Wales providing high quality, affordable housing for 17,000 people. We know that 779 households that rent a home from us have been affected by the removal of the spare room subsidy and we have been supporting these people to deal with the changes. Of these 779, some 74 are disabled and live in properties which have been specifically adapted for their needs.

Around £575k of public money has been spent on adapting homes that are now classed as being under occupied. If these people have to move to other homes, much of that investment will be wasted and further public money will be needed to adapt more homes for these people to live in. The likely costs for the whole of Wales are closer to £40 million that would be wasted. Any savings the government was hoping to achieve through lower housing benefit will be wiped out for many years by the cost of new adaptations.

The DWP has indicated that discretionary housing payments are the solution to avoid hardship and disabled households having to move. Our experience, however, is that the DHP system is not providing the solution and in truth no discretionary, time-limited payment was ever going to.

I enclose a brief research paper we have written which examines this problem in more detail.

Based on this evidence we believe there is a compelling moral and financial case for the exemption of disabled residents living in significantly adapted properties from the removal of the spare room subsidy.

This exemption could apply only to residents in their existing homes and would not only save the public purse hundreds of thousands of pounds but it would also give peace of mind to many families and individuals who are increasingly worried about what the future holds for them.

I urge the Government to consider this request and would be pleased to discuss this with you or your colleagues further at your convenience.

Yours faithfully

Shayne HembrowDeputy Chief Executive

Reply from Lord Freud, Minister for Welfare Reform, Department of Work & Pensions

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Wales & West Housing Association Limited is registered in England and Wales with charitable rules and is a registered society under the Co-operative and Community Benefit Societies Act 2014 No. 21114R